Lesson 10 : Basic Contract Law

contract

a legally enforceable and binding agreement between parties wherein a promise to do or not do something is given in exchange for valuable consideration

consideration

something of value exchanged by the parties as evidence of agreement to the terms of a contract

duress

the unlawful effort, such as threats of physical violence or other pressure, to coerce a party to perform an act

enforceability

possessing the essential elements necessary to be legally binding and obligate performance; used to describe the compelling nature of a valid contract

fraud

wrongful or criminal deception intended to result in financial or personal gain

goodwill

good consideration, such as love and affection, that can be exchanged for valuable consideration in a contract or agreement; the exchange of which is generally seen as a gift on the part of the party giving up the valuable consideration

mistake

an erroneous impression on the part of one or both parties regarding some material aspect of a contract

mistake of law

a mistake which requires that there be a misunderstanding of all parties regarding the understanding or awareness of applicable law

mutual assent

the fully agreed-upon exchange of promises by the parties; aka offer and acceptance

null and void

lacking legal or binding force; invalid

offer

a proposition made by an offeror to an offeree to agree to the terms of a binding contract; becomes a contract upon acceptance

parol evidence rule

legal concept which dictates that oral evidence can be used to support a written contract but cannot be used to contradict one

statute of frauds

a law that requires certain types of contracts, including those conveying interest in real property, to be in writing to be enforceable

statute of limitations

a legal concept that establishes time limits for bringing certain kinds of legal actions

undue influence

the act of persuading another's decisions due to the relationship between the two parties

valid contract

a contract possessing the essential elements necessary to be legally binding and obligate performance; is binding and enforceable on both parties

void

lacking legal or binding force; used to describe a contract that is either illegal or impossible to complete

void contract

a contract lacking legal or binding force; often used with phrase 'null and void'

voidable contract

a contract wherein the wronged party has the option to perform, enforce, or void the contract

addenda

additions to a completed contract that specify supplementary information to the contract

acceptance

an offeree's agreement to the terms of an offer

amendments

the change of existing information to the contract

bilateral contract

a contract wherein both parties are obligated to perform in an exchange of promises

provision

a provision within a contract that makes performance conditional upon the occurrence of a stated event

counteroffer

a contract proposal submitted in response to a previous offer, modifying the terms of the original offer; considered a rejection of the original offer

executed contract

a contract in which all terms have been fulfilled by all parties

executory contract

a contract that has not yet been fully performed (both sides have not yet completed their obligations)

express contract

an oral or written contract in which the parties explicitly state or express their intentions and their expectations regarding the contract and the exchange of promises

implied contract

a contract created by the actions of the parties rather than by express agreement

mailbox rule

legal concept which states that once written acceptance is placed in control of the mailing service, and out of the control of the offeree, it is considered accepted, not when the acceptance is actually received by the offeror

offeree

party receiving the offer

offeror

party making the offer

time being of the essence

communicates to parties of a contract that they must perform their contractual duties by a specific date and time in order to avoid a breach of contract

with reserve

term used for auctions where seller has the right to stop bidding for any reason

without reserve

term used for auctions where seller agrees to accept the highest bid regardless of the bid; aka absolute auction

unilateral contract

a contract wherein one party makes a promise and is obligated to perform if a second party chooses to accept the offer and perform in exchange for that which was promised

accord and satisfaction

an agreement in which the parties agree to discharge the original contract in favor of a new one, wherein accepted performance is often less than what was initially owed

assignee

person to whom the assignment is made

assignment

the transference of rights and obligations in a contract from one party to another

assignor

the person assigning a contract

compensatory damages

the award given to a wronged party as compensation for actual injury or loss; aka actual damages

consequential damages

damages sought as a direct 'consequence' of a party's conduct, or, the breach of contract; aka special damages

liquidated damages

damages established by the contract to be paid as compensation in the event of default

novation

a mutual agreement of the parties to replace an existing contract with a new one

release

a mutual agreement of the parties wherein one party frees the other from contractual duties

rescission

an attempt to put the parties back in a position as though the contract never existed; aka annulment

specific performance

a legal remedy that requires the party in breach of contract to perform in accordance with the terms of the contract (as opposed to paying damages)